Retirement planning has never been easy, unless your plan was to drop dead at work. But, if you happen to be one of those who do experience a financial shock, it may have the ability to deplete your savings by 25%.
But, now it seems that pre-retirees can expect to live to age 85. However, the latest SOA mortality data findings show that a 65-year-old male is expected to live to age 86.6. A 65-year-old female is expected to reach age 88.8.
The kicker is that 55% of pre-retirees and retirees do not expect to live to as vast an age as those.
According to the Society of Actuaries’ (SOA) 2015 Risks and Processes of Retirement Survey, it is also projected that a bit less than three-quarters, 72%, of retirees will experience at least one major financial setback, and for one third of them, it depletes their savings by 25%.
Unfortunately, sixty percent of pre-retirees believe the myth that their spending will decline as they carry on in retirement. This is consistent with what retirees experience, according to SOA. Only 38% of retirees said expenses in retirement were higher than they expected.
To accomplish these savings they have to make modifications to their lifestyle to reduce costs in retirement. So 90% of retirees are spending less on purchases, 70% are dining out less frequently, 56% are traveling less, 44% are cutting back on gifts and charitable giving, 17% moved to less expensive housing, and 11% refinanced their mortgage.
Make sure that you are contingencies for as many situations as you can imagine.